In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) vis-à-vis its key competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight company's performance in the industry.
NVIDIA Background
Nvidia is a leading developer of graphics processing units. Traditionally, GPUs were used to enhance the experience on computing platforms, most notably in gaming applications on PCs. GPU use cases have since emerged as important semiconductors used in artificial intelligence to run large language models. Nvidia not only offers AI GPUs, but also a software platform, Cuda, used for AI model development and training. Nvidia is also expanding its data center networking solutions, helping to tie GPUs together to handle complex workloads.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| NVIDIA Corp | 44.78 | 36.99 | 23.77 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 85.19 | 23.61 | 30.87 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 31.29 | 9.84 | 13.54 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 115.93 | 5.93 | 11.29 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 34.05 | 5.37 | 7.78 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 36.18 | 9.15 | 4.52 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 658.50 | 1.77 | 3.26 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 33.09 | 9.93 | 9.63 | 8.21% | $2.24 | $2.72 | 14.24% |
| ARM Holdings PLC | 174.54 | 19.50 | 32.89 | 3.3% | $0.22 | $1.11 | 34.48% |
| Analog Devices Inc | 62.15 | 4.10 | 12.77 | 2.32% | $1.47 | $1.94 | 25.91% |
| Marvell Technology Inc | 31.49 | 5.40 | 9.97 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 28.66 | 5.81 | 4.90 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 25.18 | 13.18 | 17.76 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 32.91 | 3.51 | 1.79 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 20.94 | 3.25 | 5.81 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 133.16 | 21.70 | 37.06 | 7.99% | $0.09 | $0.18 | 272.08% |
| ON Semiconductor Corp | 76.67 | 2.85 | 3.78 | 3.22% | $0.44 | $0.59 | -11.98% |
| STMicroelectronics NV | 45.28 | 1.31 | 2.07 | 1.33% | $0.31 | $1.06 | -1.97% |
| United Microelectronics Corp | 14.52 | 1.71 | 2.57 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 74.53 | 5.08 | 9.65 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 50.48 | 8.86 | 17 | 3.84% | $0.08 | $0.14 | 22.68% |
| Lattice Semiconductor Corp | 396.80 | 15.37 | 22.16 | 0.4% | $0.01 | $0.09 | 4.92% |
| Average | 102.93 | 8.44 | 12.43 | 4.07% | $37.65 | $32.33 | 30.95% |
When conducting a detailed analysis of NVIDIA, the following trends become clear:
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A Price to Earnings ratio of 44.78 significantly below the industry average by 0.44x suggests undervaluation. This can make the stock appealing for those seeking growth.
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With a Price to Book ratio of 36.99, which is 4.38x the industry average, NVIDIA might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
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With a relatively high Price to Sales ratio of 23.77, which is 1.91x the industry average, the stock might be considered overvalued based on sales performance.
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The company has a higher Return on Equity (ROE) of 29.14%, which is 25.07% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion, which is 1.03x above the industry average, implying stronger profitability and robust cash flow generation.
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The company has higher gross profit of $41.85 Billion, which indicates 1.29x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 62.49% is notably higher compared to the industry average of 30.95%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
By evaluating NVIDIA against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
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When comparing the debt-to-equity ratio, NVIDIA is in a stronger financial position compared to its top 4 peers.
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The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.09.
Key Takeaways
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, the PE, PB, and PS ratios indicate that the company is undervalued compared to its peers. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms its industry competitors, showcasing strong financial health and growth potential.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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